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How to invest $100k

Find out the best way to invest $100k today.

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Wondering how you can safely invest $100k? Here are our top five picks.

How to build a $100k investment portfolio

It’s important to spread your investments to various areas for good diversification. If you choose to allocate to one type of investment you may increase your portfolio’s risk.

For instance, if you only invest in stocks, you’ll lower your diversification and increase your portfolio’s risk.

The investment types you choose should depend on your financial goals and timeline. If you’re an older investor nearing retirement, you may not want to choose a riskier, more volatile investment.

Likewise, if you need the money in a few years, you may want to play it safe with an investment type that has low risk, but low returns.

If you have a high risk tolerance and long investment timeline, a $100k portfolio might look like this:

Investment type Percentage
CDs/bonds 10-25%
Stocks/ETFs/mutual funds 50-75%
Real estate/alternative investments 0-25%

Before you invest $100k

Make the most of your $100k investment by doing these things first:

  • Pay off high-interest debt. Otherwise, your debts will always grow faster than your investment returns.
  • Stock your emergency fund. Make sure you have a fully-stocked emergency fund with three to six months of expenses. Keep it in a high-yield savings account where you can tap into it when needed.
  • Maxing out retirement contributions. The maximum contribution limits in 2020 are $19,500 for a 401k and $6,000 for a Roth IRA, although you must meet certain income limits to qualify for an IRA.

Ask an expert: How should I invest my $100,000?

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Dennis Shirshikov
Financial Analyst, Fit Small Business

Investors with over $100,000 in savings should devote only 50% of their portfolio to low-risk investments. At this stage, using a financial adviser is critical because the exact mix of investments should tailor to specific goals.

Individuals planning on retiring soon need lower-risk investments they can use for ongoing cash flow, like bonds or stocks that pay a good dividend. On the other hand, younger investors have a higher risk tolerance and a longer investment horizon. Therefore, investing in instruments that can produce a higher return is far more appealing and a bitter fit for their goals.

Overall the strategy at $100,000 encompasses several different pieces of other approaches, but the most important thing is to tailor the investments to the investor’s profile and goals.

Invest in high-quality stocks

Take a portion of your $100k investment and purchase high-quality stocks from stable companies with higher profit margins and lower debt.

Pros

  • High returns. Historically, stocks have the highest potential return of any investment method.
  • Liquidity. People trade stocks daily, so you can easily convert to cash when you need it.
  • Stability. High-quality stocks don’t usually experience the same dips and swings in price as other stocks do.
  • Passive income. Many companies pay quarterly dividends to shareholders.

Cons

  • Slower growth. Contrary to startups and mid-sized businesses, these stable companies aren’t likely to experience rapid growth in the future.
  • Requires expertise. Choosing stock is difficult, so you’ll need to know how to read a stock chart and analyze its performance.
  • Higher stock prices. You could pay hundreds or thousands of dollars for one share of high-quality stock.
Name Product Stock trade fee Asset types Option trade fee Annual fee
Vanguard
$0
Stocks, Mutual funds, ETFs, Forex
$1
$20 per year
Get a personal advisor when you open an account with at least $50,000.
Sofi Invest
$0
Stocks, ETFs, Cryptocurrency
N/A
0%
A free way to invest in stocks, ETFs and crypto.
Robinhood
$0
Stocks, Options, ETFs, Cryptocurrency
$0
0%
Make unlimited commission-free trades in stocks, funds, and options with Robinhood Financial.
Interactive Brokers
$0
Stocks, Bonds, Options, Mutual funds, Index funds, ETFs, Futures, Cash
$0 + $0.65/contract, $1 minimum
0%
IBKR Lite offers $0 commissions, and IBKR Pro offers advanced tools for professional traders.
TD Ameritrade
$0
or $25 broker-assisted
Stocks
$0 + $0.65/contract,
or $25 broker-assisted
TD Ameritrade features $0 commission for online stock, but watch out for high short-term ETF and broker-assisted trading fees.
Moomoo
$0 for US stocks
Stocks, Options, ETFs
$0
Trade stocks on the US, Hong Kong, Shanghai and Shenzhen markets.
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Compare up to 4 providers

Invest in mutual funds or exchange-traded funds (ETFs)

If you’re looking to diversify your portfolio, mutual funds and ETFs may be the way to go. Both are made up of baskets of securities, such as stocks, bonds and other commodities. But mutual funds are actively managed and ETFs are passive.

Pros

  • Low costs. Many brokers offer commission-free ETFs and low-fee mutual funds.
  • Values-based investing. ETFs and mutual funds allow you to invest in specific sectors like technology and in certain ideas, such as sustainability.
  • Diversification. These investment types are made up of hundreds of securities, so you won’t feel a sting if one security tanks.
  • Liquid investments. You can readily convert mutual funds and ETFs to cash when you need it.

Cons

  • Varying levels of control. An investment manager controls mutual funds, but you can trade them daily. You manage your own ETFs, but you can’t trade them daily.
  • Capital gains. ETFs are more tax efficient than mutual funds, but you’ll pay capital gains taxes on both when you realize profit.
  • Can have pricey fees. Although there are several low-cost options out there, beware brokers with hefty trading and management fees.

Our pick: You Invest

Free online stock, ETF and options trades with $0 minimum to start.
INVESTMENT PRODUCTS: NOT A DEPOSIT • NOT FDIC INSURED • NO BANK GUARANTEE • MAY LOSE VALUE

  • Industry-low pricing
  • No minimum deposit
  • Unlimited free trades
Available asset types Stocks, Bonds, Options, Mutual funds, ETFs
Stock trade fee $0
Option trade fee $0 + $0.65/contract
Annual fee 0%

Invest with a financial adviser

If you’re looking for personalized advice on how to invest $100k, it may be time to hire a financial adviser.

Pros

  • Working with an unbiased professional. Money is emotional, so a financial adviser can keep you from making costly mistakes with your investments.
  • Industry expert. Financial advisers typically have years of experience managing large sums of money and dealing with complicated investment and tax situations.

Cons

  • Hefty fees. You’ll typically pay a set percent based on the total amount of assets under management. So, if you have $100,000 in assets and your adviser charges 2%, you’ll pay $2,000.
  • Requires thorough vetting. You’ll want to research and interview several financial advisers before you hire someone.

Our pick: Facet Wealth Financial Planning

Facet Wealth's flat fee model allows them to deliver an affordable Facet Financial Life Plan and create greater access for families that are just starting —or with assets in retirement plans

  • Affordable, flat fee
  • Transparent and simple
  • A dedicated Facet Certified Financial Planner Professional
Go to site
on Facet Wealth's secure site

Read review
Available asset types Stocks, Bonds, Options, Mutual funds
Stock trade fee
Option trade fee $0
Annual fee $480 per year

Invest in real estate

There are several ways to invest in real estate and $100k is enough to fund any method.

Pros

  • Multiple ways to invest. With $100k, you can invest through a real estate investment trust (REIT), crowdfunding platforms or through investment property.
  • REITs are safer. REITs are made up of several different properties and are more diversified and less risky than traditional real estate investments.
  • Passive income. Regardless of which real estate investment you choose, most offer monthly or quarterly payments.

Cons

  • Accreditation may be required. You may need to be accredited to invest with certain crowdfunding platforms, even if you can pay the minimum investment.
  • Direct investments carry risk. You put all your eggs in one basket with direct investments.
  • Big time commitment. If you purchase a property, you’ll have landlord responsibilities unless you outsource it to someone else.

Our pick: Streitwise

Streitwise offers a beginner-friendly way to invest in commercial real estate.

  • $1,000 minimum to invest
  • Transparent fees
  • 9.8% annualized dividends since inception
Go to site
on Streitwise's secure site

Read review
Available asset types Real estate
Stock trade fee
Option trade fee $0
Annual fee 2%

Invest in peer-to-peer lending

Lend your money to other individuals in need through peer-to-peer lending.

Pros

  • Passive income. Lenders receive monthly payments as borrowers chip away at the loan’s principal and interest.
  • Higher returns. Peer-to-peer lending offers a 6% return on average.
  • Variety. Fund many different types of loans, including personal, auto, business, medical and student loans.

Cons

  • Higher risk. With higher returns comes higher risk, but you can lower your risk by investing in multiple different loans.
  • Can’t back out. Once you fund a loan, you’re committed. You can’t hit the “undo” button and cut your losses.
  • Pay taxes on interest. You’ll pay taxes on any interest you accrue, same as you would any other after-tax investment account.

Bottom line

Make sure you invest your $100k according to your goals and needs. You may choose to build your own portfolio using stocks, mutual funds and ETFs or try something new like real estate or peer-to-peer lending.

Whichever you choose, explore top investment accounts until you find the right institutions for you.

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